Scotch whisky being imported to the US will be hit by tariffs of 25% as part of new measures being imposed this month.
The Trump administration announced that it will impose tariffs on £6.1bn worth of European imports from October 18.
They received the go-ahead from the World Trade Organisation on Wednesday, which ruled that the United States could impose the tariffs as retaliation to aid that the EU gave to Airbus in its competition with its American rival Boeing.
Scotch whisky exports were worth around £1bn to the US economy last year.
Culminating a 15-year fight over the EU’s subsidising of Airbus, the administration’s Office published a list of targeted products including cashmere sweaters and dairy products.
A senior administration official, who spoke on condition of anonymity, said that EU aircraft will face a 10% tariff and other products a 25% import tax.
President Donald Trump called the WTO ruling a “big win for the United States” and asserted that it happened because WTO officials “want to make sure I’m happy”.
“The WTO has been much better to us since I’ve been president because they understand they can’t get away with what they’ve been getting away with for so many years, which is ripping off the United States,” President Trump said at a joint White House news conference with President Sauli Niinisto of Finland.
The move escalates uncertainty for the US and global economies at a time when President Trump’s trade war with Beijing is weighing heavily on businesses, particularly manufacturers.
The US had prepared for Wednesday’s ruling and already drawn up lists of the dozens of goods it would put tariffs on.
They include EU cheeses, olives, and whiskey, as well as planes, helicopters and aircraft parts in the case – though the decision is likely to require fine-tuning of that list if the Trump administration agrees to go for the tariffs.
Stock markets around the world, which were already down on concerns for the world economy, added to their losses on the news.
Wednesday’s award follows a WTO ruling in May 2018 that the EU had illegally helped Airbus with subsidies.
The EU’s top trade official said the bloc would prefer to reach a settlement with the United States to avoid a tariff war – but it will respond if US President Donald Trump imposes new duties on EU products.
EU Trade Commissioner Cecilia Malmstrom said a tariff war “would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time.”
Karen Betts, chief executive of the Scotch Whisky Association said: “We are very disappointed that the United States Government has announced a tariff of 25% on imports of Single Malt Scotch Whisky and Liqueurs from the UK. This is a blow to the Scotch Whisky industry.
“Despite the fact that this dispute is about aircraft subsidies, our sector has been hit hard, with Single Malt Scotch Whisky representing over half of the total value of UK products on the US Government tariff list (amounting to over $460m).
“The tariff will undoubtedly damage the Scotch Whisky sector. The US is our largest and most valuable single market, and over £1bn of Scotch Whisky was exported there last year.
“The tariff will put our competitiveness and Scotch Whisky’s market share at risk. We are also concerned that it will disproportionately impact smaller producers.
“We expect to see a negative impact on investment and job creation in Scotland, and longer term impacts on productivity and growth across the industry and our supply chain. We believe the tariff will also have a cumulative impact on consumer choice.
“The Scotch Whisky industry has consistently argued against the imposition of tariffs in our sector. For the last 25 years, trade in spirits between Europe and the US has been tariff-free.
“In that time, exports of Scotch Whisky to the US and of American Whiskey to the UK and Europe have grown significantly, benefiting communities on both sides of the Atlantic, boosting investment, employment and prosperity for all.
“For this reason, the Scotch Whisky Association – alongside American and European spirits producers – has urged the EU and the US not to draw spirits into trade disputes that have nothing to do with our sector.
“We believe it is imperative that the EU and US now take urgent action to de-escalate the trade disputes that have given rise to these tariffs, to ensure that these latest tariffs are not implemented on 18 October, and to ensure that other tariffs – including on the export of American Whiskey to the EU – are removed quickly. In particular, the UK government must now work with both sides to urge a negotiated settlement and to ensure that these damaging tariffs do not take effect.”